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Raising Lazarus

Lazarus Zim, a politically engaged new boss at South Africa's Anglo American

THE Johannesburg headquarters of Anglo American are suitably grand for the biggest firm in Africa and one of the world's largest mining companies. Mighty stone blocks, towering pillars and a stained-glass window are topped with a sculpture of an Aryan-looking man clasping a bolt of lightning. It is a long way from Bethlehem, a grim provincial town to the south where Lazarus Zim lived in a shack and walked barefoot to school. But over at 44 Main Street, Mr Zim has just become the first black boss of Anglo American's South African operations.

Mr Zim reports only to the global boss of Anglo American, his compatriot Tony Trahar. The parent firm, listed both in London and Johannesburg, recently reported a rise in earnings of 59%, or $2.7 billion. Mr Zim sits atop a collection of South African firms—Anglo Gold Ashanti, Anglo Platinum, Anglo Coal and others—that last year contributed over a quarter of Anglo American's worldwide revenue. And that was a bad year. In 2002, when the local currency, the rand, was favourably weak, South African subsidiaries alone chipped in 42% of total earnings.

Why did he get the job? Mr Zim spent a year learning the ropes, but he is not a miner. He made his name at MTN, a mobile-phone company which flourished in new African markets such as Nigeria and Cameroon. As an outsider he is more familiar with the open offices of media firms, not the thick walls and long corridors of Anglo American. Although he got a warm welcome in the once lily-white mining house, he has also had to make an effort to learn how to operate within its stuffy corporate culture.

As an outsider, he is exactly what the company needs—especially in its efforts to patch up ragged relations with the government. “There is a very strong political element to my job, absolutely,” says Mr Zim. “This is a heavily regulated industry. We need business and government to work together.” He hopes to put an end to political sniping. Last September, President Thabo Mbeki berated Mr Trahar for saying that some political risk remains in the country. Other bosses at Anglo American have drawn official ire for publicly raising concern over various government policies.

Mr Zim needs to manage ties with the government carefully. His priority is getting existing mining rights “converted” into new ones. Previously firms owned minerals wherever they had a right to mine, but new laws describe underground deposits as state property; the government then grants rights to exploit them. “We have to show that this process works,” says Mr Zim. So far it is painfully slow: it could take another four years for old rights to be converted. This sort of uncertainty discourages investors. Although Mr Zim says Anglo American will invest nearly $4 billion in the country in the next few years, spending by the industry as a whole in South Africa is slipping.

Surveys indicate that mining firms believe other African countries, notably Botswana and Tanzania, have more welcoming laws. Miners also grumble that they are unsure what royalties the South African government will collect in exchange for licences (previously none were charged). Officials now talk of varying burdens: a few percentage points on the revenue of gold miners, more for platinum, rising to perhaps 8% for diamonds. Mr Zim expects to see legislation on this in the next few months, but nobody knows when the new royalties will be applied.

Mr Zim also needs more co-operation from state-run firms, notably the giant transport firm Transnet. Crowded railways and harbours hinder exports. Kumba Resources, a 67%-owned subsidiary, wants fast expansion of its iron ore exports, but says it needs a railway line extended. To get such things, Anglo American sorely needs a boss to whom politicians listen.

Smoother relations will also probably depend on Anglo American making faster progress with “black economic empowerment”. This means, in effect, shifting more wealth and power into black hands, something the government is desperate to speed up. Mr Zim's own appointment is a useful statement of intent, though some critics say he is merely a token black face at the top. Mr Mbeki, in his annual State of the Nation speech in February, welcomed Mr Zim's appointment as “indicating the large resources his company will spend to empower a great number of black enterprises”.

Capital shift

But Mr Zim may find it difficult to meet these expectations. Anglo's subsidiaries are listed independently, so direct interference is tricky, though Mr Zim does have influence as a member of their boards. Some subsidiaries, including Kumba Resources, may announce this year deals to shift more capital to black investors. Mr Zim also wants more goods and services bought from black-owned suppliers. Last year business worth 5.7 billion rand ($1 billion) went to black firms. This should rise by at least a fifth each year. He wants more black managers: 40% of senior jobs should be held by non-white staff by 2009.

Satisfying other government demands will be more difficult. The government says firms should sell or transfer more equity to black investors, but measuring that is tricky. Anglo American wants recognition for unbundling itself a decade ago, when it helped to set up black mining firms such as African Rainbow Minerals and Mvelaphanda Resources. The government seems reluctant to recognise that. Officials also want the mining firms to set up firms to polish or cut stones, or to make jewellery. That would create jobs and could count as black empowerment. But miners say, reasonably, this is not their business and, anyway, South Africa's high labour costs mean it is not the place to do it.

On his office wall hang two photos of Mr Zim smiling beside powerful people. In one he poses with Mr Trahar, in the other he sits next to Mr Mbeki. Keeping both men happy is going to be a delicate task.